Bed Bath & Beyond is expected to file for bankruptcy as early as this month, says one market expert.
“It appears the end is coming for Bed Bath & Beyond,” Edward Moya told FOX Business. The senior market analyst for OANDA in New York added: “Bankruptcy announcements could come as soon this January when they report earnings, but it might take a few more months. “
People with knowledge of the matter fold The Wall Street Journal the company is in the initial stages of planning for a bankruptcy and that the process may extend into February.
BED BATH & BEYOND DELIVERS GRIM WARNING
|BBBY||BED BATH & BEYOND INC.||1.30||-0.39||-22.78%|
Shares of the domestic merchandise retailer tumbled Thursday when the company issued a going concern warning and said it would not be able to timely file it’s quarterly earnings report. Bed Bath & Beyond expects to report third quarter earnings on Jan 10.
Shares have fallen roughly 50% over the last week, increasing its losses to approximately 90% over one year.
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Going concern warning
Bed Bath & Beyond said: “Based on business performance for the three months ended November 26, 2022, the company has determined the need for additional time to complete its quarter-end close procedures.”
It also concluded there is substantial doubt about its ability to continue as a going concern. Such warnings are common ahead of bankruptcy filings or restructuring agreements with lenders.
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On Thursday, the company said it expects net sales of approximately $1.259 billion, down 33% compared to $1.878 billion from the same time last year, reflecting lower customer traffic and reduced levels of inventory availability.
The net loss is forecast to widen to $385.8 million from $276.4 million. The number will include approximately $100.0 million of impairment charges which are subject to further review and potential adjustment.
“The troubled retailer is losing too much money and a quick turnaround seems unlikely given their debt situation, strong competition, and a weakening economy,” Moya said.
The company is burning cash.
Net cash from operations was an outflow of $582.4 million in the quarter ended Aug. 27, compared to an inflow of $46 million in the prior year. The company ended quarterly with $135.3 million of cash, down from $440 million year over year.
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